Global Ad Spend Forecasts: Key Markets & Media

Global ad spending forecasts have been released by Zenith, MAGNA [pdf] and Dentsu Aegis Network [pdf] in the past week. Among the commonalities between the three forecasts is a projected slowdown in spending this year relative to last, along with some consensus that digital is set to overtake TV despite some disagreement as to when that might occur.

Global Ad Spending Trends

The forecasts each show slower spending growth this year, with 2 of the 3 figuring a recovery in 2018:

Zenith: 4.8% in 2016; 4.2% this year; and 4.1% in 2018;

MAGNA: 5.9% in 2016; 3.7% this year; and 4.5% in 2018; and

Dentsu Aegis: 4.8% in 2016; 3.8% this year; and 4.3% in 2018.

Regions & Markets

The following is a look at some of the highlights of the forecasts by region and market.

Regions

Looking at the areas that will see the fastest growth, the reports are generally in agreement that the Central & Eastern European region will be among the leaders:

For Zenith: Eastern Europe & Central Asia (+9.8%) will lead the way, while the Middle East and North Africa will see a large contraction of 18.6%;

For MAGNA: Central & Eastern Europe will top the regional charts with growth of 7.2%; while

For Dentsu Aegis: Central & Eastern Europe will see above-average growth of 6.6%, though this will trail the regional leader, Latin America (7%).

Russia & India to See Rising Spend

In terms of individual markets, Dentsu Aegis predicts that India will see the most rapid growth this year, with ad spending climbing by 13%, up from 11.9% last year.

Next up is Russia, which will flirt with double-digit growth in ad spending (9.8%) this year after an 11.4% hike last year.

MAGNA comes up with similar numbers, forecasting low double-digit growth for Russia (~10.5%) and an 11.5% gain for India.

The US to Experience Modest Growth

While forecasts surrounding the US are fairly divergent, it does appear that the US advertising market will grow more slowly than the worldwide average, at least this year. That’s probably to be expected given that it’s the most mature market in that it’s almost 3 times the size of the next-largest, China ($191B and $75B, respectively in 2016).

Dentsu Aegis calls for US ad spending to climb by 3.6% this year (versus the 3.8% average) and by 4% next year (compared to the 4.3% global average).

MAGNA is more sober in its outlook for the US, forecasting a 1.6% increase this year (versus the 3.7% global average) followed by a 4.8% hike next year (above the 4.5% global total).

Zenith doesn’t break out the US in its predictions, but sees a 3.4% increase on the horizon this year for North America (the US and Canada), below the 4.2% average.

China to Contribute to Global Growth

The Chinese market’s ad spending growth is slowing, per Zenith, though it will be the second-largest contributor to global expenditure growth.

Between 2016 and 2019, China will account for 22% of global ad spend increases (almost $15B), behind only the US, which will represent 28% of spending growth ($19.8B).

By 2019, then, the Chinese ad market’s size will be almost $90 billion, per Zenith, or more than 40% of the US market size ($210.5B).

Dentsu Aegis has revised its forecast for China upwards since its previous forecast released in September 2016, seeing a 7.4% increase last year (revised up from 5.7%) and a 6% climb on the horizon this year (revised up from 5.5%). Growth will slow next year to 5.4%, per the forecast.

Likewise, MAGNA has revised its predictions for China, forecasting a 7.3% rise this year (revised up from 6.5% in the prior forecast).

Outlook Not As Pretty For the UK

While the UK has been a solid trajectory for several years, with compound annual growth of 7.3% from 2011 through 2016, it’s set for a dramatic slowdown this year, according to Zenith. The impact of political uncertainty – including the Brexit negotiations – will result in ad spend growth crawling to just a 0.9% increase this year, down from 9.6% last year.

MAGNA agrees that the Western European region will experience slower growth this year largely as a result of the UK market. While the UK market had been the region’s growth driver in years past – with an average gain of 6% in each of the past 4 years – it will slow to a 1.9% increase this year. MAGNA predicts that modest growth to continue into next year, when UK ad spend will rise by just 1.5%.

Dentsu Aegis is the most optimistic about UK ad spend growth. While it has revised its previous forecast down by 0.6% points, it still envisions UK ad spend to rise by 4% this year, rebounding to a 5.9% gain next year.

Media Channels

The following is a brief look at some of the media-related highlights, by source.

Zenith: Digital to Exceed TV This Year

It’s been threatening to happen for quite some time, but Zenith finally sees internet advertising overtaking traditional TV this year to become the world’s largest ad medium, accounting for 37% of total expenditures.

The internet’s share of total ad spend will continue to grow in the coming years as it outpaces average ad spending increases across media. With an average increase of 11% per year from 2016 through 2019, the internet is expected to account for almost 42% of global ad spending in 2019, with display growing its lead over paid search during that timeframe.

Display will be powered mainly by online video (16% per year on average between 2016 and 2019) and social media (20% per year on average), though traditional display will recover from an 0.7% increase last year to see 6% growth through 2019.

As for mobile, it’s obviously climbing fast, representing 44.5% of internet ad spend last year and 15.1% of total global ad spend. By 2019, mobile will easily surpass desktop in digital ad spend, comprising almost 63% of internet ad expenditure and 26.3% of all ad spending.

Print, meanwhile, will see the opposite trend: newspaper ad spend will fall from 10.9% share of the total in 2016 to 8.3% share in 2019, while magazines will drop from 5.8% to 4.3%, respectively.

MAGNA: Traditional Media Down This Year, With OOH the Only Exception

MAGNA is predicted a 2.3% decline in traditional media sales around the world this year, in stark comparison to digital’s 14.1% rise.

While linear TV’s decline will be small (-0.9%), print losses are mounting (down 9.3%). Radio won’t be immune to these trends, down 2%, though out-of-home and cinema advertising will buck the trend with a 4% gain.

As for digital ad sales, mobile will see the fastest growth, and is projected to account for more than one-fifth (22%) of all media owner ad revenues this year.

Dentu Aegis: Mobile to Overtake Desktop Spend This Year

Finally, Dentus Aegis forecasts that ad spend on mobile will surpass that of desktops this year to reach 56% of global digital ad spend.